In a bid to boost its financial flexibility, Summit Hotel Properties, Inc. INN has successfully completed a new $125 million unsecured term loan with a maturity period of 7 years. The Austin, TX-based real estate investment trust (“REIT”) has utilized the proceeds for repayment of outstanding borrowings under its senior unsecured revolving credit facility.
The floating rate of interest attached to this unsecured term loan is determined on the basis of floating rate plus a spread over either the Eurodollar Rate or the Base Rate. The spread, which depends upon the company’s leverage ratio, range within 80–160 basis points (bps) for Base Rate-based borrowings and 180–260 bps for Eurodollar Rate-based borrowings. Further, as per the terms of the loan, Summit Hotel may be allowed to raise the loan capacity to $200 million, albeit upon fulfillment of certain customary conditions.
Summit Hotel is primarily engaged in acquiring and owning premium-branded, select-service hotels in the upscale and upper mid-scale segments of the lodging industry. The closing of this $125 million loan deal, underscoring the support lent by the company’s credit partners, also validates the quality of its portfolio and execution strategy. Following the completion of this loan facility, Summit Hotel held a debt portfolio with a weighted-average term-to-maturity of over five years. Further, the deal provides the company with adequate liquidity to address its debt maturities through 2017.
Currently, Summit Hotel sports a Zacks Rank #1 (Strong Buy).
Investors interested in the REIT sector may also consider stocks like Ashford Hospitality Trust, Inc. AHT, CoreSite Realty Corporation COR and Gladstone Land Corporation LAND. All these stocks carry the same Zacks Rank as Summit Hotel.
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